While we encourage folks to save long-term for retirement, the Roth IRA has a “hidden secret” that provides a ton of flexibility. When you have had any Roth IRA for a period of 5 years or more, you are able to withdraw the contribution portion (not the gains) without tax or penalty. There are many situations where this can be helpful:
- Children’s education
- Home purchase
- Health concerns
- Or any other emergency type situation
It is important to know that this can impact your savings for retirement, so it should not be done without careful consideration and advice. The time between now and April 15 is a great time to talk to an adviser about this or about investment strategies you can use to reduce your taxes.
A word to the wise: your tax preparer will not always have the time or inclination to advise you about traditional IRA contributions which would reduce your taxes and, once you file, it may be too late to take advantage of an IRA deduction. Contact us at Faith Investment Services if you want to have a conversation at 419-358-4207.
